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Microsoft is promising channel partners that its services company will no longer create headaches for channel partners, citing extensive reforms to the way in which its direct services staff are rewarded for their work.

Microsoft Services provides consulting and support services to the vendor's largest enterprise customers and also engages in any Microsoft-related projects that are bleeding edge and high risk. In a keynote speech presented to Microsoft partners at the Fusion 2002 conference in Melbourne last week, enterprise services director Kevin Ackhurst said the Microsoft division has been marred by a bad reputation for aggressive selling of its services.

Ackhurst said that resellers in Canberra had shown particular contempt for Microsoft Services when tendering for deals with government agencies. "If these conflicts exist, we need to know about them," he said. "It's important we jump on these issues as quickly as possible."

Not that channel partners should be too concerned about the vendor's services business, Ackhurst said. Microsoft Services employs 182 people in Australia, while it serves upward of 300 large enterprise customers, he said. "There is no way we can take control of ownership of the interaction with all of these customers."

The vendor only has 16 consultants and support staff in Canberra, and it is nearly impossible for such a small team to take ownership of a major government contract, Ackhurst said.

Nevertheless, he believes that the potential for channel conflict existed because of the way Microsoft Services staff had been rewarded in the past. The business division has operations in every state with the exception of the Northern Territory and Tasmania and, until the start of the latest fiscal year, each state had to account for its profit and loss. "Each state manager would be protecting their own profitability," he said. "This has implications when they are considering their business against Microsoft's channel partners, or even against Microsoft's services businesses in other states."

Since July 1, substantial changes have been put in place to alleviate this problem. Microsoft Services staff have been appointed to promote deals according to key industry verticals, and will work closely with those partners with expertise in their assigned vertical. More importantly, consultants will no longer be rewarded according to how much services revenue they generate. Instead, they will be rewarded for the products channel partners sell as a result of their services work.

Microsoft Services has also appointed Kevin Rodrigo to a new position as of next month, in which he will lead the interactions between Microsoft Services and channel partners. Ackhurst said Rodrigo's role will be far more meaningful than the typical channel manager, who he said "does a lot of smiling and hand-shaking but delivers little value to resellers".

"Rodrigo is someone who knows how to make partners money, not just take them to the rugby," he said.

The changes to Microsoft Services in Australia fall in line with what is generally a softer approach worldwide to providing services that conflict with the vendor's partners. In the US, Microsoft has released to its business partners a list of the top 1,000 customers that partners should expect to see the services division working in. "But they shouldn't expect Microsoft Services to be working alone," said group program manager Raul Bandeira. "It's just that some companies insist on having Microsoft's skin in the game."

But as one partner pointed out after walking out of Ackhurst's keynote, the rhetoric is meaningless without some action to prove it. "Why couldn't they just show us a nice neat little diagram that says exactly how both [Microsoft Services] and us should engage when we are going for the same deal? We need to know where they stop and we begin," he said.

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